Enabling Negotiators to Say No: Four Steps for Systematic Improvements

If you were to ask commercial negotiators what their objectives were, I think 9 out of 10 would probably say something like “get a deal” or “get to yes.” It is so ingrained in us that what negotiators do is “make deals” that we forget that not every deal should get done.

Yes, negotiators generally want to figure out how to reach agreement. But more important than making deals is making the right deals. A negotiator who is not prepared to walk away (and to know precisely what walking away would mean) is not prepared to negotiate. The best negotiators make good decisions about when to keep negotiating and about whether the best deal they can negotiate is as good as their best walk-away alternative.

One bit of jargon: Negotiators who have read Getting to Yes: Negotiating Agreement Without Giving In, or almost any of the many negotiation books since its publication, often use the term BATNA — best alternative to a negotiated agreement — to describe what they will do if the answer is “no.” Although this is not necessarily their preferred outcome to the negotiation, it’s the best they can do on their own, without the other side’s agreement.

Many negotiators view not doing a deal as some kind of failure.

But when you fail to anticipate the possibility that you might not get to a deal, you leave yourself exposed to the whims of your counterpart. If they are willing to walk away from the deal you were expecting (even if you think that’s a bad move for them), you will have to confront a choice about what to do. If you don’t know your BATNA, you will make concessions you didn’t expect to have to make (and that perhaps you shouldn’t).

When making a tough choice in a negotiation, you should always make sure you know your BATNA and have at least considered or estimated theirs. Without that knowledge or perspective, you are much more likely to make a mistake, either accepting a deal that was worse than what you could do by walking away or by breaking off negotiations when your alternative is actually worse.

Knowing your BATNA doesn’t always mean you should discuss it during the negotiation. Raising the possibility of walking away inevitably raises the temperature and the stress level in a negotiation; that’s something worth doing if you think your counterpart is misestimating your BATNA or their own, but probably not otherwise.

Another reason to include BATNA in your preparation is that BATNAs can be dynamic.

There is often something you can do to improve your BATNA, which then raises the floor for your negotiation. And there is sometimes something you can do to make their BATNA seem less attractive. One or both of those can be useful, especially when the stakes are high. But again, be careful how you use that during the negotiation if you want to avoid making moves that may seem aggressive or threatening to your counterpart.

This is all standard advice for individual negotiators and their first-line managers, but as a business leader, how do you position your organization to make better choices consistently across hundreds or thousands of commercial negotiations?

1. Make preparation mandatory.

If you want to make sure negotiators know their BATNA, require them to articulate it before they negotiate. It’s not hard to do; for example, one of our reinsurance clients has started making submissions of a negotiation preparation memo, including a discussion of BATNA, a prerequisite to approving any deal travel. An IT services client puts the burden of making sure negotiators have prepared thoroughly on sales managers.

Choose what works for your organization’s culture, but don’t fail to insist that negotiators know their BATNA.

2. Ensure incentives only reward deals that are better than your BATNA.

Sales teams incentivized to close deals do what they need to do to make their targets, even if some of those deals shouldn’t be done. But if BATNAs are clear in advance, the burden of justifying a deal that doesn’t meet that bar should be pretty tough to meet.

3. Incorporate BATNA analysis (and improvement) into deal review processes.

If your organization does complex multi-year deals, perhaps involving multiple business units, your deal review process probably includes key stakeholders who can bring different perspectives to a deal, including strategic, financial, operational and relationship considerations.

Yet, without taking BATNA into account and exploring whether that BATNA can be improved over the course of the deal’s timeline, you are leaving untapped a major lever for improving results across your entire deal portfolio.

4. Recognize where you are weakest and proactively invest in BATNA improvement.

It is one thing to ask a deal team what they can do to improve their BATNA right before they have to decide how to conclude a negotiation.

It is quite another to diagnose your deal portfolio as a whole and identify types of deals where a weak BATNA is often a problem. For those, consider what you could do over time to ensure that for the next deal of that type, your BATNA will be better.

One of the branches of the military I was working with undertook a process to systematically analyze how to improve their BATNA in single-source acquisition negotiations; even in their highly regulated and stylized procurement process, they discovered a variety of improvement opportunities at different points in the procurement timeline.

“We decided to walk away” is often one of the hardest things for a motivated negotiator to say. But understanding when to talk and when to keep negotiating is critical to the long-term success of any deal team. Enabling your organization to do that systematically across a broad deal portfolio is among the most effective steps you can take to improve your negotiation outcomes.